Whether or not to sell biodiesel can be a significant decision for a convenience store owner. Convenience store owners need to determine what will work best for their operation and how they can maximize their profitability through the use of biodiesel.
Here are a few things to consider:
Tank and pump availability
First and foremost do you have the storage tank and pump capacity to add a biodiesel blended fuel to your product offering? If you currently offer diesel fuel, then adding biodiesel blended fuel is relatively simple — just order the biodiesel blended fuel from a reliable supplier. If you currently do not offer diesel fuel you will need to determine and evaluate how adding a new tank and pump will impact your business. If you decide to make an infrastructure investment in your convenience store and offer biodiesel blended fuel, there are a number of states that offer grants or loans to help fuel retailers with the investment in tanks and blending systems.
Selecting a reliable supplier
When selecting a biodiesel partner it’s important to note that biodiesel must adhere to stringent quality tests by ASTM D6751 standards — including cold weather performance indicators. That’s 20 rigorous tests the fuel must pass before it hits the market. Plus, the biodiesel industry offers a BQ-9000 accreditation program that provides additional quality assurance. Make sure the biodiesel you purchase meets ASTM D6751 standards and comes from a BQ-9000 accredited producer.
For convenience stores, having an on-site biodiesel storage tank can be a crucial biodiesel logistics component. Having a tank and blending system at the convenience store will provide maximum flexibility. This will allow you to purchase biodiesel directly from the producer, helping to keep costs down, maximize margins and achieve flexibility in selecting what blends you wish to offer.
Even if a convenience store does not have an on-site blending system in place, the improved logistics in the supply chain allow for the quick delivery of pre-blended biodiesel product. Jobbers are becoming more efficient at providing a diverse array of biodiesel blends and, along with biodiesel producers, are continually elevating their efforts to provide all-around support.
In every state, biodiesel can be blended with traditional petroleum diesel up to 5%; at this B5 blend level, the fuel still meets ASTM D975 fuel specifications and does not require any additional labeling at the pump. Once retailers begin to sell blends from B6 to B20, labeling is required.
Biodiesel blending economics are a fundamental way to enhance fuel margins within a convenience store. The margins are really tight at retail in the convenience store business. Many of our convenience store customers have discovered they can go from making a fraction of a cent per gallon up to two, three or four cents per gallon when they add biodiesel blended fuel to their service offering.
Once a convenience store becomes comfortable with the lower blend levels and they see the positive impact on their bottom line, it is then fairly easy to move into higher blend levels to help maximize economics.
Many states offer economic incentives to retailers who offer biodiesel blended fuel. If a convenience store owner operates locations in several states, they need to be aware of each state’s laws.
In Illinois, for example, many retailers blend at B11 levels and above year-round to help take advantage of the state excise tax abatement. In Iowa, there is an incentive in place for B5 blends of four-and-a-half cents per gallon, plus a three-cent retail tax differential on B11 and higher blends. Texas, California, Minnesota and Pennsylvania are also among the states pioneering incentives for blending biodiesel or improving biodiesel infrastructure.
Retailers who have made the switch are fast seeing the benefits of providing an economically advantageous, easily implemented alternative fuel.
Jon Scharingson — Jon oversees the sales and marketing efforts for Renewable Energy Group, Inc., a leading biodiesel producer.